Wednesday, 12 September 2012

The causes of unaffordable homes (and therefore the things we 'MUST' fix

If we are going to have affordable housing we need house prices to reflect better what they cost. This means less section 106's money being spent by the council and less developers / land owners cashing in on planning permissions. It also means stopping 'buy to let' being the only pension you can rely on. 

But before we build loads of houses we need to make sure that land and homes are what they should be relative to cost of living first. UK is already unsustainably populated so any building should be done with resolving that in mind.

The main problem. Lords taxing the peasants.

A landlord should either provide a valuable service or they are simply a new version of a lord of old taxing the peasants who work the land.

Hoarding land is a low work way of providing a robust income as well as providing simple to set up tax free legacy to avoid death duty of 40%. As your property portfolio ages the mortgage payments  (if any) become lower relative to rents and profits go up, allowing you to purchase more properties. You might perhaps pay a little over the odds since you know it will pay off in the end.

Your grandchildren, who inherit the 'business' can then charge other peoples grandchildren to rent from them. Your grandchildren will therefore have money to purchase more properties and expand the trust. Or, if they are creative, they will use their rent income to buy faster appreciating assets or land in developing counties. Removing the wealth from uk circulation, driving unnafordable housing in other countries and expanding the number of other people's grandchildren their grandchildren can tax for having access to one of the basic needs. Shelter.

The demand for homes has increased not simply because bacnks allowed people to go beyond the safe limits of their finances, otherwise the value of property would not be able to fluctuate as it does. The problem is property hoarders who have more money available who are thinking long term and avoiding 40% death duty. Douche of Cornwall for example.

There is a double whammy here. The increase price means people who bought their home have higher borrowing. Not only has our new buyer purchased a home for double the build cost, but they will pay multiples of that to the bank before they pave paid it back.

Meanwhile there is a new additional waste work (work that has no real world beneficial output). Those people who simply had to rent because prices are so high have their relationship with the property managed. If they owned their home there would be no unnecessary property management and that person could do something of value for a living, rather than be a rich burden on society.

This has reached epic proportions in the UK. #RentBritain

The fix would be simple if only so many buy to let landlord didn't have little equity and that house prices need to come down by about 50% to be a real reflection of the cost of actually building a home. A reduction like that would create a negative equity bomb that would put the banks back in the red.

Thankfully we did not adopt the Euro. So we can still fix it.

If we can not deflate property prices we must inflate everything else. Including Salaries. 
Perhaps 10% / year for ten years. This can be done by printing money. This effectively steals from the rich to give to . . whoever they give the money to so it would be nice if it was split evenly with citizens.

It would normally create a run on the pound as senior politicians, I mean investment bankers, try to get their money into globally stable assets, ready to buy back in to the UK after the printing has stopped. But since other counties are hemorrhaging at the moment it may not. I would drop the EU for a bit and restrict capital flow. Like Malaysia did in  1978.

If our 'Wealth Creators' are so clever let them try to create money by getting people here to do something of value. Not buying and selling imported goods, hoarding land or gambling with the advantage of inside information.

To stop property from inflating also we must carefully limiting lending so that working people can only borrow the money they should to afford for home. 

So how do we stop those landlord grandchildren buying the properties and starting the process again?

Here are some options I like.

'Right to Buy' extended to private market, for private and business. If you are letting out a property are either providing a service or are privately taxing another human. And should go and do some useful work. If after 2 years your tenant feels that you are not providing a service they have the right to purchase the house from you at the going rate. Using avoidance tactics *kicking out 2 days before, selling to a mate, must be made to be 'not worth trying'. In the same breath the administrative costs of the transaction must be negligible.

Land hoarding businesses holdings to be be subject to death duty. So if you own or hold shares in businesses, or are a beneficiary in a trust, 40% of those assets will revert back to the state.

Alternatively scrap death duty and introduce a wealth tax. e.g. 1%.

But don't expect this to happen without some kid of change to what we demand of politicians when we vote. Here is a list of some large political donations financial sources.

Here is one way you can change it.

No comments:

Post a Comment